Candlesticks with a long upper shadow, long lower shadow and small real
bodies are called spinning tops. The color of the real body is not very
The pattern indicates the indecision between the buyers and sellers
The small real body (whether hollow or
filled) shows little movement from open to close, and the shadows indicate
that both buyers and sellers were fighting but nobody could gain the upper
Even though the session opened and closed with little change, prices moved
significantly higher and lower in the meantime. Neither buyers nor sellers
could gain the upper hand, and the result was a standoff.
If a spinning top forms during an uptrend, this usually means there arenít
many buyers left and a possible reversal in direction could occur.
If a spinning top forms during a downtrend, this usually means there
arenít many sellers left and a possible reversal in direction could occur.
Sounds like some kind of voodoo magic huh? "I will cast the evil spell of
the Marubozu on you!" Fortunately, that's not what it means. Marubozu
means there are no shadows from the bodies. Depending on whether the
candlestickís body is filled or hollow, the high and low are the same as
itís open or close. If you look at the picture below, there are two types
A White Marubozu contains a long white body
with no shadows. The open price equals the low price and the close price
equals the high price. This is a very bullish candle as it shows that
buyers were in control the whole entire session. It usually becomes the
first part of a bullish continuation or a bullish reversal pattern.
A Black Marubozu contains a long black body with no shadows. The open
equals the high and the close equals the low. This is a very bearish
candle as it shows that sellers controlled the price action the whole
entire session. It usually implies bearish continuation or bearish
Doji candlesticks have the same open and close price or at least their
bodies are extremely short. The doji should have a very small body that
appears as a thin line.
Doji suggest indecision or a struggle for turf positioning between buyers
and sellers. Prices move above and below the open price during the
session, but close at or very near the open price.
Neither buyers nor sellers were able to gain control and the result was
essentially a draw.
There are four special types of Doji lines. The length of the upper and
lower shadows can vary and the resulting candlestick looks like a cross,
inverted cross or plus sign. The word "Doji" refers to both the singular
and plural form.
When a doji forms on your chart, pay special
attention to the preceding candlesticks.
If a doji forms after a series of candlesticks with long hollow bodies
(like white marubozus), the doji signals that the buyers are becoming
exhausted and weakening. In order for price to continue rising, more
buyers are needed but there arenít anymore! Sellers are licking their
chops and are looking to come in and drive the price back down.
Keep in mind that even after a doji forms,
this doesnít mean to automatically short. Confirmation is still needed.
Wait for a bearish candlestick to close below the long white candlestickís
If a doji forms after a series of candlesticks with long filled bodies
(like black marubozus), the doji signals that sellers are becoming
exhausted and weakening. In order for price to continue falling, more
sellers are needed but sellers are all tapped out! Buyers are foaming in
the mouth for a chance to get in cheap.
While the decline is sputtering due to lack
of new sellers, further buying strength is required to confirm any
reversal. Look for a white candlestick to close above the long black